Many credit cards offer introductory 0% APR promotions to incentivize people to apply as new customers. But after that promotional interest rate period ends, you may still find yourself carrying a balance and wanting low-interest financing, and you may not want to apply for yet another credit card.
Fortunately, some credit card issuers offer the chance to get ongoing 0% APR offers in the form of balance transfer checks. If you’ve ever received a balance transfer check in the mail or are looking for the chance to save money on credit card interest, here’s everything you need to know.
What is a balance transfer check?
Balance transfer checks are paper checks that are tied to your credit card instead of a checking account. Their purpose is to make it easy to transfer a balance from another credit card to the card that’s issuing the check. Banks issue these to encourage cardholders to continue using their credit card accounts.
Balance transfer checks frequently offer an introductory 0% APR, but using one will also cause you to incur a balance transfer fee — typically between 1% and 5% of the transferred amount. For example, if you write a check for $1,000 and the balance transfer fee is 3%, $30 will be added to your card’s balance in addition to the $1,000 check amount.
Because of the way they’re designed, though, you can use a balance transfer check for just about anything you want, not just balance transfers. You could write the check to another lender to consolidate your debt to one place, for instance. Or you can write the check to yourself, deposit it into your checking account, and use that cash for everyday expenses.
In 2017, I even used a balance transfer check to exercise my stock options in a company I had worked with for two years. I was light on savings at the time but knew the 1% transaction fee would pale in comparison to the potential upside when I ultimately sold my 1,000 shares in the future.
Balance transfer checks vs. convenience checks
Balance transfer checks aren’t the only checks you may receive from your credit card company. Convenience checks can often be attached to your statement at the end of the month, and effectively allow you to do the same thing you can do with balance transfer checks.
The difference is that convenience checks are considered cash advances. This means that in addition to a cash advance fee — which is typically higher than a balance transfer fee — you also won’t get any introductory interest rate on the deal. In fact, cash advances start accruing interest immediately with no grace period, and sometimes at a higher interest rate than your card’s regular APR (annual percentage rate).
As a result, it’s important to read the terms of any blank check you receive from your credit card issuer. On the surface, the checks may look the same, but as you read the fine print, watch out for language that provides more insight. For example, if there’s no 0% APR promotion mentioned, the APR mentioned is higher than your card’s regular APR, or the terms contain verbiage about interest accruing from the date of the check deposit, it’s likely a convenience check.
Even if you’re sure you’re holding a balance transfer check, always read the fine print to understand all the terms and conditions of the balance transfer offer. The last thing you want is an unexpected surprise when what you’re trying to do is save money.
How to use a balance transfer check
Some card issuers will send them to you of their own volition; others may give you the option to request one. Check your online account or call customer service to find out if you can request a balance transfer check. Once you receive them, balance transfer checks look and act the same way as personal checks, so it’s important to treat them as such.
If you’re planning to use one to pay off another credit card, write the check out to the credit card issuer and send the payment by mail. You can use it to make a payment on a personal loan by making the check out to the lender that holds your loan. Alternatively, you can write the check to yourself, deposit it into your checking account, and make a payment to your credit card account or personal loan online.
When you receive balance transfer checks in the mail, you’ll usually get a handful of them. If you’re not going to use all of them, make sure to shred any unused checks instead of just throwing them away. This way no one else can draw money from your credit line.
After the check is deposited by the recipient, you’ll see it posted on your associated credit card account, along with the balance transfer fee. You’ll then have however long the offer said to pay off that transferred balance free of interest charges.
When is a balance transfer check a good idea?
A balance transfer check can be a good idea in several situations, but it’s always important to practice good financial habits.
For example, I chose to use a balance transfer check because the potential benefit of the investment from exercising my stock options far outweighed the $12 balance transfer fee I paid to use my check. I paid roughly $1,000 to exercise my options and the most recent offer I received from the company to buy them back was $7,000. Also, I knew I’d be able to pay off the remaining balance within a few months, long before the introductory period ended.
It can also be worth it to use a balance transfer check if you’re dealing with some unexpected expenses, and the alternative is putting the charges on the card at its regular APR for purchases. Even with the fee associated with the check, you could end up paying far less than what you’d owe in interest. This way, instead of consolidating high-interest credit card debt, you’re avoiding it in the first place.
Finally, it’s definitely worth using a balance transfer check for its intended purpose: paying off another credit card.
Regardless of how you choose to use a balance transfer check, it’s important to do the math, comparing the check’s fee with the potential savings you’d gain by using its 0% interest offer. Also, double check to see if you can get a better 0% APR offer from a different credit card — maybe for a longer period or with a lower balance transfer fee. Even if the idea of applying for another credit card is unappealing, it can be worth it if you stand to save a lot more that way.
Best balance transfer credit cards
If you’re considering using a balance transfer check to move a balance from one credit card to another and you'd like to do it with a new credit card, here are some of the best balance transfer cards for the job:
|Card name||Intro balance transfer offer||Balance transfer fee||Annual fee||Credit required|
|Citi® Diamond Preferred® Card
||0% for 21 months (then 15.99% to 25.99% (variable))||$5 or 5%, whichever is greater||$0||Excellent, Good|
|Citi® Double Cash Card - 18 month BT offer||0% for 18 months (then 16.24% to 26.24% (variable))||5 or 3%, whichever is greater, for the first 4 months; after that, $5 or 5%||$0||Excellent, Good|
|U.S. Bank Visa® Platinum Card||0% for 20 billing cycles (then 16.74% to 26.74% (variable))||$5 or 3%, whichever is greater||$0||Excellent, Good|
Citi® Diamond Preferred® Card
The Citi® Diamond Preferred® Card is one of the best balance transfer credit cards on the market because it provides one of the longest 0% APR periods available. You’ll get a 0% intro APR for 21 months (then 15.99% to 25.99% (variable)) on balance transfers made within the first four months after account opening. You’ll also get a 0% APR deal on purchases for 12 months (then 15.99% to 25.99% (variable)).
The caveat is that the card charges a balance transfer fee of $5 or 5%, whichever is greater, which is about as high as it gets with major credit cards. That said, the card can be a solid choice if you want to maximize the amount of time you have to pay off your credit card debt.
Citi® Double Cash Card - 18 month BT offer
The Citi® Double Cash Card - 18 month BT offer offers an impressive 0% APR on balance transfers for 18 months (then 16.24% to 26.24% (variable)) which gives you plenty of time to pay off or significantly pay down your credit card debt. What’s more, the card has an impressive rewards program — up to 2% cash back on all purchases: 1% as you buy and 1% as you pay for those purchases.
This card can be great for people who want to get value out of a balance transfer card after the promotional period ends. Its balance transfer fee is 5 or 3%, whichever is greater, for the first 4 months; after that, $5 or 5%, but you can easily make up for that with cashback rewards.
That said, the card doesn’t have a 0% APR promotion on purchases, and if you make purchases while you’re still paying off your balance transfer, they’ll accrue interest immediately, so avoid charging anything new to this card until after you’ve paid off the transferred balance.
U.S. Bank Visa® Platinum Card
The U.S. Bank Visa® Platinum Card is a great card if you want a long promotion on both purchases and balance transfers. This credit card offers a 0% intro APR for 20 billing cycles (then 16.74% to 26.74% (variable)) on balance transfers and a 0% APR for 20 billing cycles (then 16.74% to 26.74% (variable)) on new purchases. These are the longest intro APR periods I’ve found from a single card when looking at both purchases and balance transfers.
That said, this card has no rewards program, so you’ll have to decide whether using this card is still worth it to you after the promotional interest rate period ends. The balance transfer fee is $5 or 3%, whichever is greater.
FAQs about balance transfer checks
As we researched balance transfer checks and credit card balance transfers, we came across several frequently asked questions on the topic. Here are some of the more common questions, along with their answers.
Can you write a balance transfer check to yourself?
Yes, you can write a balance transfer check to anyone you want. Even if you’re planning to use the check to pay off another credit card or a loan, the process can go more smoothly if you write the check to yourself and make the payment online rather than mailing the balance transfer check to the lender.
Can I write a balance transfer check to someone else?
Yes, you can write a balance transfer check to someone else. That includes lenders or even other people.
How long does it take a balance transfer check to clear?
Once the check has been deposited or cashed, it typically takes a few days for it to clear, just like a personal check. Because there may be a lag between when you write the check and when it gets deposited, it’s important to avoid using up the available credit you’re committing with the check so it doesn’t bounce. Treat that money as spent, just as you would with a regular check coming out of your bank account.
How do I stop a balance transfer on a check?
I’ve received countless balance transfer checks from various credit cards, but have never seen information in the fine print about how to stop a balance transfer check. If you’ve written a check and want to stop it before it gets deposited or cashed, it’s best to call your credit card issuer to see what your options are.
Do balance transfers hurt your credit?
Balance transfers can impact your credit negatively if the action increases your credit utilization — that’s your credit card balance divided by your credit limit. Banks view a higher utilization of your available credit as making you riskier to them.
For example, let’s say you have two credit cards: Card A has a $2,000 balance and a $10,000 limit; and Card B has a $0 balance and a $4,000 limit. If you were to transfer your balance from Card A to Card B, your utilization rate across both cards would remain the same. But your single-card utilization rate would jump from 20% to 50%, which could harm your credit score.
That said, your credit utilization rate is calculated every month when your card issuers report your account balance to the credit bureaus, and as you pay down your balance, you’ll see your credit score recover. If transferring saves you a lot of money in interest charges, it could be well worth a temporary credit score drop.
Balance transfer checks can be a great way to help you consolidate your credit card debt or cover some other essential expenses. Before you use one, however, make sure you read the fine print to understand the terms, and do the math to determine whether it’s the right financial step for you.